A roundup of trading on major world markets:
NEW YORK – US stocks plunged on Friday, with the Dow Jones Industrial Average sliding more than 300 points, as global stock markets were stung by fresh anxiety in the eurozone over Greece’s bailout.
The Dow fell 303.68 points (2.69 per cent) to close at 10,992.13. The broader S&P 500 fell 31.67 points (2.67 per cent) to 1,154.23, while the tech-heavy Nasdaq Composite shed 61.15 points (2.42 per cent) to 2,467.99.
Early losses on Wall Street accelerated after the unexpected news that the European Central Bank’s chief economist, Juergen Stark, was resigning “for personal reasons”.
Hours after his resignation was announced, Stark called for drastic reforms to the eurozone, as ECB watchers suggested that the bank was deeply split over its handling of Europe’s sovereign debt crisis.
Stark, a German, had been a sharp critic of the ECB’s controversial program of buying government bonds of deeply indebted eurozone countries like Greece, Ireland, Portugal, Spain and Italy.
“The markets are falling sharply because there is a lot of fear that there might be a European sovereign debt situation, and in particular in Greece,” said Peter Cardillo, chief market economist of Rockwell Global Capital.
Shell-shocked investors scurried for the safety of US Treasuries, sending the yield on the 10-year note to its lowest level in history.
Bond prices closed the day with solid gains even after coming down from record highs.
The yield on the 10-year Treasury note fell to 1.92 per cent from 1.99 per cent late Thursday, while that on the 30-year bond declined to 3.25 per cent from 3.31 per cent.
LONDON – Stocks in Europe and the euro plunged on Friday after the shock resignation of the European Central Bank’s chief economist just as a G7 meeting in France opened seeking new ways to fend off gloom in the world economy.
The tumble began after a weak opening on Wall Street, driven down by scepticism over a US jobs stimulus and doubts about European banks, especially after the IMF chief reiterated her urgent plea that lenders recapitalise in view of their holdings of Greek debt.
Led by bank stocks, European shares plunged as much as 5.0 per cent, with French Societe Generale down over 10.0 per cent, as alarm about growth and debt again burnt into confidence, and then a new shock struck with a resignation at the European Central Bank.
In London, the FTSE 100 index of leading companies fell 2.35 per cent to 5214.65 points. In Paris, the CAC 40 slid 3.60 per cent to 2974.59 points, and in Frankfurt the DAX tumbled 4.04 per cent to 5189.93 points.
Elsewhere in Europe, Milan plummeted 4.93 per cent, Madrid 4.44 per cent, Lisbon 2.5 per cent, Brussels 3.2 per cent and Amsterdam 2.6 per cent.
The ECB said chief economist Juergen Stark would resign for personal reasons, just as Group of Seven leaders were meeting in France on the debt crises and new warnings of slowdown and even recession.
“It’s very bad news for the markets. (Stark) was one of the most powerful elements at the ECB,” Andrea Tueni of Saxo Bank said.
HONG KONG – Asian shares mostly fell on Friday as China’s August inflation rate remained on the high side, while US President Barack Obama’s plan to boost jobs in the world’s biggest economy failed to inspire markets.
Sentiment was also weighed by news that eurozone growth forecasts were slashed due to concerns over the ongoing debt crisis, while Japan’s economy shrank more than first thought in the April-June quarter.
Tokyo closed 0.63 per cent, or 55.46 points, lower at 8737.66, while Seoul was 1.83 per cent, or 33.71 points, off at 1812.93.
Hong Kong shed 0.23 per cent, or 46.19 points, to 19,866.63 and Shanghai was flat, edging down 1.19 points to 2497.75.
Taipei added 0.82 per cent, or 62.20 points, to 7610.57.
China said consumer prices rose by 6.2 per cent year-on-year in August, down from July’s three-year high of 6.5 per cent.
Investors fear that if prices remain too high the government will announce more monetary tightening measures to go with the five interest rate rises since October and numerous increases in the amount banks must keep in reserve.
The figure provided some lift to markets that rely on China to help drive their economies, including Australia and Taiwan.
However, despite the rise, analysts said price rises were still on the high side.
WELLINGTON – New Zealand shares rose as investors weighed conflicting corporate and economic reports at the end of a week in which appetite for risk improved.
Briscoe Group gained after posting higher earnings and Pyne Gould Corp fell.
The NZX 50 Index rose 15.884 points, or 0.5 per cent to 3,323.932. Within the index, 21 stocks rose, 14 fell and 15 were unchanged. Turnover was a lower-than-average $77.6 million.
Asian markets advanced after US President Barack Obama proposed a $US447 billion plan to spur economic growth, and after China’s inflation rate eased last month.
As the Rugby World Cup tournament got under way there were mixed reports from retailers and tourism operators, while Statistics New Zealand said total spending on electronic cards fell 0.5 per cent to a seasonally adjusted $NZ5.3 billion ($A4.18 billion) in August.
